Those investments come amid a dispute over Japan's illegal purchase of China's Diaoyu Islands. If October is considered by itself, Japanese spending in China slumped by 32.4 percent year-on-year as Japanese companies became "more prudent on shifting their manufacturing bases to China", the Nikkei newspaper reported on Tuesday.

The dispute between China and Japan has affected the countries' trade as well as their investments into each other's markets.

The seventh East Asia Summit, held in Cambodia from Monday to Tuesday, was not an occasion for scheduled talks between Premier Wen Jiabao and Japanese Prime Minister Yoshihiko Noda. Even so, ministerial-level talks among China, Japan and South Korea led to a trilateral free trade agreement, that will help further integrate the region's trade and economy.

Gui Haoming, chief analyst at Shenyin & Wanguo Securities Co, said FDI will continue to go into China at a slower pace so long as the global economy shows signs of a meek recovery and China's economic growth slows.

The Global Investment Trends Monitor, released by the United Nations Conference on Trade and Development on Oct 23, showed that China attracted $59.1 billion worth of FDI in the first half of the year, surpassing the US to become the recipient of the largest amount of foreign direct investment. Many saw that as a sign that global investors are still confident in China's economic prospects.

In contrast to the decrease in FDI, China's outbound direct investment kept up its momentum from January to October, increasing by 25.8 percent year-on-year to $58.17 billion.

"This is the inevitable outcome of Chinese companies' going abroad, of an improvement in Chinese companies' competitive strengths," Shen said.

China will find it hard to have its foreign trade increase by 10 percent this year, a figure called for by government plans.

Even so, its share in global trade "is likely to keep expanding this year from 10.4 percent in 2011, as China's foreign trade increased faster than other major economies' and also faster than global trade expansion", Shen said.